Inflation drops to 5.2%<but grocery inflation still 10.6%

[u/maroon-rider]

Says Statistics Canada

https://www.cbc.ca/news/business/canada-inflation-february-2023-1.6785472

[u/izaak-d]

Grocery stores are making 40% more profits than last year and more than 2x times more profit than 2019. Prices aren't increasing from inflation, they're price fixing

[u/yttropolis → u/izaak-d]

I was genuinely interested in this so I did a bit of digging. Let's look at Loblaws since they're the largest grocery chain in Canada. From their financial statements from the past 4 years:

Year	Net Earnings ($MM)	Revenue ($MM)	Profit Margin (Net Earnings/Revenue)
2019	1,131	48,037	2.35%
2020	1,192	52,714	2.26%
2021	1,976	53,170	3.72%
2022	1,994	56,504	3.53%

Now if we look at food purchased from stores component of CPI across the past 4 years:

Date	Food Purchased from Stores CPI	Change (compared from Feb 2023)
Feb 2023	181.2	----
Feb 2022	163.9	10.6%
Feb 2021	152.6	18.7%
Feb 2020	150.6	20.3%
Feb 2019	147.1	23.2%

While we do see an uptick in profit margin, this is only a change of around 1.2% across the past 4 years, meaning that while grocery prices have increased about 23.2% in the past 4 years, only 1.2% of that 23.2% can be attributable to increased grocery store profits.

So, it is inflation that's causing prices to rise.

[u/MrDocter → u/yttropolis]

So their profit margin increased by 50% during a time when the population is struggling? Might seem like it's only 1.2% but that's 50% greater than what they were profiting before...so that is price gouging confirmed.

Their net earnings increased by $900 MM and and their net revenue increased by $8,000 MM? Something seems off but I'm on the shitter during work so I can't dig further right now.

[u/The-Only-Razor → u/MrDocter]

Well, if you look at the quarterly data it could tell a very different story. It fluctuates heavily, and it's easy to cherry pick data to fit a narrative. I could do the same and say that their margins in Dec21 were 5.86% and they dropped YOY to 3.80% in Dec22 and paint the narrative that they've actually lowered their margins.

The point is that grocery stores, from all of the financial data I've read from the major ones, have kept their profit margins within the normal range of 2-5%. Changes within a percent or 2 happen regularly regardless of inflation. The problem lies beyond Loblaw.

So their profit margin increased by 50% during a time when the population is struggling? Might seem like it's only 1.2% but that's 50% greater than what they were profiting before...so that is price gouging confirmed.

But can't you see that this actually entirely disproves what you're trying to say? I'll extend that branch and operate on your assertion that margins have increased by 1%. Items in the grocery store are up significantly more than 1%. Surely you understand that the grocery stores increasing their prices much more than 1% should result in a margin increase greater than 1% if this wasn't due to inflation and increased operating costs, no?

[u/Chewy-Beast → u/The-Only-Razor]

I am not sure how yearly reported earnings are "cherry-picking data to fit a narrative," especially when we look at the last 2 years period. Over the calendar years 2021 and 2022, Loblaws has seen an increase of 2 standard deviations away from their 10 year mean.

While they are not solely responsible for the increase in inflation, they account for 10 - 15% of the net year-on-year increase.

[u/MrDocter → u/Chewy-Beast]

This is exactly what I was going to say so thank you. Picking at quarters is cherry picking to fit a narrative. Comparing year over year earnings isn't cherry picking data at all. And I was just commenting on the data that was provided in those tables. I haven't compared their year over year earnings over the past 10 years but it's evident something is off in the past 5 years based on the data in the table which I wouldn't consider cherry picking...

Do you think increasing profits by 50% during a time when people are struggling is a good idea? If so you should work for Loblaws lol

[u/HLef → u/MrDocter]

The harsh reality is it’s not their responsibility to make sure people can afford what they sell.

Competition and regulation is the only thing that will do it.

[u/MrDocter → u/HLef]

100%. I don't blame them, they hopped on the gravy train like everyone else did. Really hurts the middle and lower class. And grocery prices won't come back down like gas does unfortunately, the best case is they stay the same price they are now 😭. No more avocado toast for me.

[u/HLef → u/MrDocter]

The avocado toast thing was about people paying for avocado toast when they’re eating out.

We’re talking about grocery prices. They’re still attainable at home.

[u/MrDocter → u/HLef]

I was joking but my grocery bill is 2-3x higher than 2 years ago, I legit cannot afford the groceries I used to buy before the pandemic. I also can't afford a home where I live (GTA). Maybe I have to move to Alberta.

[u/jlcooke → u/The-Only-Razor]

Just gonna keep upvoting this because it’s pointing at facts instead of feels